Rum’s Ready to Rebound

The second-largest spirits category isn’t resting on its laurels. It’s on the cusp of being the next big thing, say industry experts, as rum’s beach-bum image morphs into sophistication. Variety and versatility are rum’s greatest strengths – attributes that should enable the category to win market share from the hot whiskey and tequila segments. To do that, though, consumers need to better understand this multi-faceted spirit through changing consumption patterns, drinking occasions, marketing and educational efforts.

Rum has variety greater than just about any other spirit, ranging in character from white to gold to dark. Light rum’s mixability is unequaled by vodka or tequila, and gold rum brings complexity to cocktails. Rich, barrel-aged sippers can hold their own against other brown spirits, aficionados say, including bourbon. There is something for every drinking occasion and consumer palate. Rum has got it all.

“The rum category includes a wide range of products, including both light and dark expressions, to meet all of our consumers’ varied tastes and needs,” says Arvind Krishnan, vice president and brand managing director for the rum category at Bacardi U.S.A.

Some industry observers think that rum’s rise has been somewhat hobbled by its fanciful reputation, but that is changing.

“Rum is no longer about pirates, tropical beaches and tiki; that image is shifting. Rum today is more about the craft aspect,” says Marlana Persson, marketing coordinator for Niche Import Co. The New Jersey supplier was recently acquired by the Dutch group Marussia Beverages, which brought with it the Mezan label of aged rums. Niche also imports Stroh, an over-proof rum from Austria.

“Rum has a party reputation,” adds John Eason, COO & executive vice president at Serrallés USA, whose flagship is the Don Q brand. “What’s so exciting to see is that consumers are graduating from those occasions and discovering its elegance.”

“Pirates or beachside, that’s where the category has been. But now we are starting to see brands talking about rum in a different way – talking about the production process, the impact of tropical aging, the terroir,” says Andrew Floor, vice president of marketing for dark spirits at Campari America. The company’s portfolio includes venerable brands Appleton Estates, Wray & Nephew and Coruba.

Growing in the Right Direction

Compared to other spirits segments, rum’s expansion has been less than robust; however, it seems the category is moving in the right direction.

“Although rum consumption has been relatively flat over the past year, it continues to be the second-largest spirit category, behind only vodka, so the overall outlook is quite positive for brands large and small,” says Brendan Lynch, senior director of rum and cordials at Beam Suntory. Mid-sized players, like Cruzan, expect continued notable growth, he adds.

According to the Distilled Spirits Council (DISCUS), the rum category overall was down 1.5% in volume last year at 25 million 9-liter cases, while revenues were nearly flat at -0.8%, totaling $2.4 billion. Significantly, super-premium rum grew gangbusters, nearly 10% by volume and 12% in revenues.

Greg Cohen, VP of Corporate Communications at Patrón Spirits, is heartened by this evidence of premiumization. “We’ll likely see a similar trend this year, with ultra-premium brands like Pyrat outpacing the category,” he predicts. Patrón markets the Pyrat Cask 1623 and Pyrat XO Reserve labels. Volume has consistently grown every year, says Cohen, as more trade and consumers discover the brand.

“Rum is continuing to perform well and attract new consumers to the category each day. This is especially true in the ultra-premium tier, where people are learning to appreciate the nuances and complexities in quality sipping rums such as a brand like Zacapa Rum,” says Daniel Kleinman, vice president of rum for Diageo North America.

Study in Brown

Many rum experts believe that there are lessons to be learned and tactics to take from brown spirits, especially the red-hot whiskey category. Indeed, there are many parallels in flavors and aromas that can be drawn between barrel-aged rum and whiskey. When enthusiasts have had their fill of Bourbon and Scotch, the thinking goes, consumers thirsty for the next bibulous frontier will turn to premium rums. Rum has the edge in price and retailers are starting to notice this trend.

“Whiskey is at a peak right now; retailers are rushing to get them on the shelf, but there is a barrel shortage and you can’t rush whiskey aging,” says Alex Vaughn, liquor associate at Liquor Mart in Boulder, Colo. “I can see people investigating aged rums to find those same flavor notes.” Among the rum brands moving well for the retailer are Mount Gay, Ron Abuelo, Zacapa and local distillers’ products.

“Bourbon has almost overtaken vodka as the best-selling spirit; but rum hasn’t gone away. And I think aged rums can take business away from whiskey,” says Jim Guzay, a manager at Minotti Wine & Spirits, one of five retail stores in the Cleveland area. Guzay says customers who are into barrel-aged spirits are also into dark rums. Mount Gay and Bacardi are big sellers for Minotti. Plus, Guzay adds, “Rum is more reasonably priced than comparably aged whiskeys.”

Brand managers are also predicting cross-over from the other brown spirits categories.

“In the last three to five years, brown spirits have grown exponentially. As a sub-tier, the premium segment in the rum category has grown with it. Consumers are ready for longer-aged, more robust sipping experiences,” Krishnan says. He cites Bacardi Gran Reserva Ocho Años and the Bacardi Facundo Collection as prime examples of aged rums.

“Dark spirit drinkers, Bourbon or whiskey, are more open to straight or aged rums, because of similar flavor profiles,” says Bailey Pryor, CEO and founder of The Real McCoy Rum brand. “Whiskey and tequila have experienced growth through premiumization. Rum is now experiencing the same transformation.”

“We see dark, aged rums like our Single Barrel and Estate Diamond Aged Dark being enjoyed neat or over ice,” says Lynch at Cruzan. “We expect to continue to see this trend grow as whiskey and bourbon fans seek out new spirits and rum drinkers explore the barrel-aged trends driven by these spirits.”

Swapping Spirits

Some producers are setting their sights directly on whiskey aficionados. “With Mezan, we are going after the rum geek, not the mainstream rum drinkers,” explains Persson. “We are targeting whiskey drinkers, too.” One hook is that Mezan XO is aged in used Bourbon barrels and produced in small batches. The company also makes a number of single-distillery vintage rums, such as Mezan Jamaica 2000 and Mezan Panama 2004. Rum is much more affordable than comparable whiskeys, too, she adds.

At Campari America, Floor advocates connecting consumers from American whiskey to rum. “It’s not going to take a lot to build those bridges. The aspects of whiskey that appeal to the Millennial audience are the flavors from wood aging, the sense of place and heritage, the skills of master distillers and master blenders. Rum can deliver all of those,” Floor says. He advocates substituting aged rum for the whiskey in classic cocktails like the Old Fashioned and Manhattan.

To that end, Zacapa offers a new signature Old Fashioned recipe created by Master Blender Lorena Vásquez and Miami mixologist Julio Cabrera. This take on the classic adds chocolate bitters, expressed grapefruit peel, and grates dark chocolate on top as a garnish, which brings out those flavor notes in the aged rum. “We’ve found that this is an excellent way to engage both members of the trade and consumers to experience the excellence of Zacapa in a cocktail that also harkens back to the importance of the Old Fashioned recipe in cocktail history,” says Kleinman at Diageo.

At Liquor Mart, Vaughn reports that consumers are substituting rum for vodka and tequila in their favorite drinks, like Moscow Mules and Margaritas. “Rum mixes well with fruit juices, too,” he says. To aid customers in this cocktail quest, the retailer has posted more rum recipes to its website and is adding them on shelf talkers.

“Mixologists are finding that aged rums make a great substitute for Bourbon,” says Eason at Don Q. “And there is a definite interest in tiki rum drinks with some amazing tiki bars opening up around the country.”

“Serious craft bars have embraced tiki and are bringing back the Daiquiri and Mai Tai, which had been bastardized,” echoes Floor. “If you are drinking a classic rum cocktail like Daiquiri, using a premium brand adds complexity and flavor, takes it to the next level.”

Geography Lessons

One of the biggest challenges facing the rum category is education. Even though the industry is largely centered around the Caribbean, the spirit can be and is made just about anywhere. Even within the tropical sphere, it’s hard to discern the differences between Haitian rum and Barbados rum, Guatemalan and Nicaraguan rums. And Dictador, based in Cartagena, makes premium aged Colombian rum from cane syrup. Then there’s the rhum agricole category. Even industry pros, while knowledgeable about their own products, are less conversant about other rum producing areas. Obviously, more education is needed.

“Generally, most consumers do not have a broad knowledge of the differences between rums. Their choices tend to be driven more by brand familiarity than by production and provenance,” Krishnan says. The launch of the “Bacardi Untameable Since 1862” campaign in late 2014 was the latest effort to communicate the brand’s “larger-than-life heritage in a way that truly resonates with like-minded irrepressible spirits.” That campaign continues to evolve this year with new content.

For its part, Niche Import has hired five additional people to the marketing team, and engaged mixologist and author Warren Bobrow as Mezan brand ambassador.

“The problem with rum is not every country plays by the same rules,” explains Eason at Don Q. Various countries’ aging requirements—or lack of them—can lead to consumer confusion. In some countries, you can have a very small amount of 23-year-old rum in a blend and market it as 23 years old. Some companies add sugar after the final distillation process to artificially sweeten their rums,” he adds. For its part in educating the public, the Don Q “Unquestionable” campaign will have more TV time and a bigger digital presence this year.

Appleton Estate launched its “From Jamaica with Love” campaign a year ago, which focuses on the place and the people who make the rum, from the world’s first female master blender to the coopers who make the barrels. “It’s about the terroir and the people who have dedicated their lives to producing this rum,” Floor says. The VP believes that retailers should use a geographical approach in shelving their rum sections, and use more shelf talkers to educate customers.

A picture is worth a thousand words. Universal Pictures will be releasing a movie about rum runner Bill McCoy, known for never adulterating his alcohol and leading to the phrase, “The Real McCoy.” Pryor authored the screenplay for the film, which is coming to theatres in 2017 starring Chris Pratt.

Quality Sells

Overall, producers are bullish on the future of top-quality rum. “We often hear how rum is poised to be the next big category, and hopefully that’s true,” says Cohen at Patrón Spirits. “The category is very dynamic, and there’s truly so much to discover in this spirit.”

Predicts Floor at Campari, “I think premium aged rum is going to be the next big thing.”

For retailers, it’s still all about hand-selling, says Vaughn at Liquor Mart. “If we guide customers through the rum selection, they tend to choose more of the barrel-aged and small-batch products.”

Cuban Connection

There may be more rum in the U.S. to talk about in the near future. As the United States and Cuba move towards normalizing relations for the first time in 50 years (and possibly lifting the trade embargo), interested parties speculate on what that will mean for Cuban rum in the U.S. market.

Pernod Ricard, which markets the Havana Club brand globally, has reportedly invested in its Cuban distillery and registered the Havanista brand in the U.S. Bacardi retains the Havana Club trademark in the U.S.

“Bacardi is proud of its Cuban roots. We have the utmost respect and sympathy for the Cuban people with whom we share a common heritage,” says Amy Federman, director of Global Corporate Communications at Bacardi-Martini, Inc.

“Regarding the current Cuban front, it is too early and would be highly speculative to comment on the embargo, sales, return and/or any actions relating to Cuba,” she adds. “We will need to wait and see what the impacts are. We hope for meaningful improvements in the lives of the Cuban people and will follow any changes with great interest. In the meantime, we continue to support the restoration of fundamental human rights in Cuba.”

Thomas Henry Strenk is a Brooklyn-based freelance writer with over 20 years experience covering the beverage and restaurant industries. In his small apartment-turned-alchemist-den, he homebrews beer kombucha, and concocts his own bitters and infusions.

5 Comments

A excellent overview of the evolving rum market, this article brings a wide range of opinions and insights from many talented people in a position to see the future of rum. The fascination with aged rums, distilleries, styles — and now vintages and limited edition expressions — is changing the perception of rum in the eyes of many consumers. Two or three years down the road, savvy consumers will be debating their favorites un-aged cane spirits — describing the direct results of the production and distillation technologies and methods that they admire most — and rum will finally shed it’s ill-perceived reputation as a spirit of ordinary, unremarkable note.

I popped the cork stopper open on a bottle of pre-embargo Cuban Bacardi dark on New Year’s Day that I’ve had squirreled away for over 40 years & it was magnificent ! Looking forward to a return trip to the island in the near future.